Complete guide to ODI under FEMA 2022: 400% net worth limit, RBI approval thresholds, loan/guarantee norms, APR and FLA reporting.
Overseas Direct Investment: FEMA Rules & Net Worth Limit
The Foreign Exchange Management (Overseas Direct Investment) Rules, 2022 govern Indian entities investing abroad, allowing financial commitments up to 400% of net worth under the automatic route. Investments exceeding this require prior RBI approval.
The framework permits overseas joint ventures, wholly-owned subsidiaries, and equity-linked instruments. Provisions cover loans, guarantees, share swaps, and downstream investments. Entities must comply with Annual Performance Report (APR) and Foreign Liabilities and Assets (FLA) return filing deadlines.
Legal advisors must conduct due diligence on valuation, ensure compliance with sectoral caps, and monitor reporting obligations. Recent clarifications extend these rules uniformly across jurisdictions, including high-risk jurisdictions like the UAE, with stringent exit and realisation norms.
